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French court orders probe into Lagarde

A French court has ordered an investigation into the role of IMF head Christine Lagarde in a huge settlement paid to a businessman friend of President Nicolas Sarkozy when she was finance minister.

FRANCE-LAGARDE - Another court in another country but once again the case involves the Head of the International Monetary Fund.

This time its Christine Lagarde - not her predecessor Dominique Strauss Kahn.

A French court has backed a prosecutor's request to investigate whether Lagarde's abused her authority by approving of a massive compensation payment to a friend of President Nicolas Sarkozy.

She was France's Finance Minister at the time.

Gerard Palisse is a senior member of the court.

SENIOR REPUBLIC COURT OF JUSTICE OFFICIAL GERARD PALISSE SAYING:

"I can't give you the motivation or the contents of the decision as it's not a public act, not a judgement that can be made public. But I would indicate to you simply and without any further details that it is a recommendation to a measure of investigation concerning Mrs Lagarde."

The case involves a 285 million euro payment to Bernard Tapie in 2008.

It was paid after he claimed the former state-owned bank Credit Lyonnais defrauded him 15 years earlier when he sold his stake in the sports clothing business Adidas.

The former left-wing government minister lost his case in 2006.

A year later he switched political sides to support Sarkozy's bid for the Presidency, and launched an appeal against the court's decision.

Lagarde overruled objections to drop the case.

But there is no suggestion she profited personally and her lawyer says she has nothing to fear.

LAYWER FOR IMF CHIEF CHRISTINE LAGARDE, YVES REPIQUET SAYING:

"At the end, there will be definitely a ... the lack of charge. There will be a lack of charge and they will be at the end definitely given up. So we are more than confident."

The case could take years to run its course and it will not prevent Lagarde doing her job.

But it has cast a shadow over her leadership of the IMF - coming just a month after she took office and at a time of global economic turmoil.